China Eximbank provides $36.9 million preferential buyer’s credit for the Upgrade of the Vahdat-Yavan Section of the Dushanbe-Kurgantube Railway Project (Linked to Record ID#40489)

Project narrative

On November 7, 2014, the Ministry of Finance of the Republic of Tajikistan signed two loan agreements [CHINA EXIMBANK GCL NO. (2014) 30 TOTAL NO. (533) and CHINA EXIMBANK PBC NO. (2014) 40 TOTAL NO. (334)] worth $68,992,970 with the Export-Import Bank of China (China Eximbank) for the Upgrade of the Vahdat-Yavan Section of the Dushanbe-Kurgantube Railway Project: an RMB 191.9 million government concessional loan (GCL) provided on highly concessional terms (a 20 year maturity, an 11 year grace period, 1.5% interest rate, a 0.2% commitment fee, and a 0.2% management fee) and a $36.9 million preferential buyer’s credit (PBC) on highly concessional terms (a 2% interest rate, a 20 year maturity, 9 year grace period, a 0.2% commitment fee, and a 0.2% management fee). The loan agreements were ratified by the Tajik Parliament on January 14, 2015. The Government of Tajikistan then on-lent the proceeds of the PBC and GCL to Tajikistan Railway (Rohi Ohani Tojikiston or Роҳи оҳани Тоҷикистон) through a set of on-lending agreements [No. TAJ 2014 ROT-029 (1) and No. TAJ 2014 ROT-029 (2)] that were signed on January 16, 2015. Tajikistan Railway was expected to use the loan proceeds to finance a $59,993,900 commercial contract that it signed with China Railway 19th Bureau Group Co Ltd on August 13, 2013. Record ID#40489 records the GCL and Record ID#71443 records the PBC. The project involved the construction of construction of 5 bridges and 3 tunnels along the Vakhdat-Yavan section of the Dushanbe-Kurgantube railway. It was to become the first railway project launched and completed under the framework of the "Silk Road Economic Belt" initiative, and was to become a hub of an international railway network connecting China, Tajikistan, Afghanistan, and Iran. China Railway 19th Bureau Group Co Ltd was the contractor responsible for project implementation. Construction began on May 15, 2015 and the project was completed on August 24, 2016. However, according to a 2021 CAREC assessment, '[c]ompletion of the Vakhdat–Yovon Railway in 2016 does not seem to have attracted the additional traffic expected.' There are also signs that the China Eximbank PBC and GCL which were contracted to finance the Upgrade of the Vahdat-Yavan Section of the Dushanbe-Kurgantube Railway Project financially underperformed vis-a-vis the original expectations of the lender. In 2021, Tajikistan's Ministry of Finance was instructed to make a $25 million repayment (including penalty interest fees) to China Eximbank because Tajikistan Railway was unable to meet its repayment obligations.